Comptel Oyj, Finland v. DCIT, Circle-1(2)(1), International Taxation, New Delhi

ITA 5539/DEL/2019 | 2015-2016
Pronouncement Date: 19-05-2021 | Result: Allowed

Appeal Details

RSA Number 553920114 RSA 2019
Assessee PAN AAQCS7326E
Bench Delhi
Appeal Number ITA 5539/DEL/2019
Duration Of Justice 1 year(s) 10 month(s) 24 day(s)
Appellant Comptel Oyj, Finland
Respondent DCIT, Circle-1(2)(1), International Taxation, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 19-05-2021
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 19-05-2021
Assessment Year 2015-2016
Appeal Filed On 25-06-2019
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI D BEN CH NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI N.K. BILLAIYA ACCOUNTANT MEMBER AND SHRI KULDIP SINGH JUDICIAL MEMBER ITA NO.5539/DEL/2019 [ASSESSMENT YEAR: 2015-16] M/S COMPTEL OYZ C/O-ERNST & YOUNG LLP GOLF VIEW CORPORATE TOWER-B SECTOR-42 GURGAON HARYANA-122002 DCIT CIRCLE-1(2)(1) INTERNATIONAL TAXATION ROOM NO.410 E-2 BLOCK 4 TH FLOOR CIVIC CENTRE NEW DELHI-110002 PAN - AAQCS7326E APPELLANT RESPONDENT APPELLANT BY SH. SPARSH BHARGHAV ADV. RESPONDENT BY SH. RAJESH KUMAR SR. DR DATE OF HEARING 19.05.2021 DATE OF PRONOUNCEMENT 19 .05.2021 ORDER PER N.K. BILLAIYA ACCOUNTANT MEMBER THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST TH E ORDER DATED 27.05.2019 FRAMED U/S 144C(13) R.W.S. 143(3) OF THE ACT FOR AS SESSMENT YEAR 2015-16. 2. THE SUBSTANTIVE GRIEVANCE RELATES TO THE TREATME NT OF RECEIPT FROM SALE OF STANDARD SOFTWARE AS ROYALTIES UNDER ARTICLE 12(3) OF THE IN DO-FINLAND TAX TREATY. THE AO HAS DISCUSSED WITH THIS ISSUE AT PARA 5 ON PAGE 2 OF HI S ORDER AND AT PARA 7.1 AND 7.2 OF PAGE- 2 ITA NO.5539/DEL/2019 3 OF HIS ORDER. HE HAS REFERRED TO THE TREATMENT G IVEN BY HIS PREDECESSORS IN AY 2008-09 TO AY 2014-15. THIS SHOWS THAT THE ISSUE IS NOT COM ING UP FOR THE FIRST TIME BU9T HAS BEEN CONSIDERED BY THE REVENUE AUTHORITIES IN EARLIER AS SESSMENT YEARS ALSO. 3. WE FIND THAT THIS QUARREL HAS BEEN RESOLVED BY THE ORDER OF THE COORDINATE BENCH OF THE TRIBUNAL IN EARLIER ASSESSMENT YEARS A LSO THE LAST BEING ITA NO.6443/DEL/2016 AND ITA NO.7649/DEL/2017 FOR AY 20 13 AND 2014-15. THE RELEVANT FINDING OF THE ORDER READS AS UNDER:- 4.4. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUS ED THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE BE TWEEN THE PARTIES THAT FACTS AND BUSINESS MODEL OF THE ASSESSEE REMAI NED THE SAME AS WAS IN THE PRECEDING YEARS FROM ASSESSMENT YEARS 20 08-09 TO 2012- 13. THIS FACT HAS BEEN ADMITTED BY THE ASSESSING OF FICER IN PARA 6 OF HIS ASSESSMENT ORDER WHICH READS AS UNDER: '6. I HAVE CAREFULLY CONSIDERED THE ASSESSEE'S REPLIES AND HAVE EXAMINED THE RECORDS. I HAVE ALSO EXAMINED THE FACTS OF THE VARI OUS CASES CITED BY THE ASSESSEE. IT IS OBSERVED THAT NOT ONLY THE FACTS AN D THE BUSINESS MODEL DURING THE SUBJECT AY REMAINS THE SAME AS IN AYS 20 08-09 2009-10 2010- 11 2011-12& 2012-13 BUT THE ASSESSEE'S CONTENTIONS ARE ALSO SAME AS THOSE RAISED IN THE ASSESSMENT PROCEEDINGS FOR THE EARLIER AYS. AS SUCH I AM UNABLE TO COME TO ANY DIFFERENT CONCLUSION OTHER TH AN THAT ARRIVED AT BY THE AO FOR AYS 2008-09 2009-10 2010-11 2011-12 AND 2 012-13. THE REASONS FOR THE COMING TO CONCLUSION ARE EXPLAINED IN THE F OLLOWING PARAS. 4.5. WE NOTE THAT THE TRIBUNAL AND THE HONBLE DEL HI HIGH COURT IN EARLIER YEARS HAS ADJUDICATED THE PRESENT CONTROVERSY WHETHER THE CONSIDERATION RECEIVED FROM SALE OF SOF TWARES WOULD AMOUNT TO ROYALTY OR NOT. THE TRIBUNAL IN THE ASSES SEES OWN CASE FOR ASSESSMENT YEARS 2007-08 2008-09 AND 2009-10 HELD THAT SALE OF SOFTWARE BY THE ASSESSEE IS STANDARD SOFTWARE WHICH IS CHARGEABLE TO TAX UNDER ARTICLE 7 OF THE DTAA AS BUSINESS INCOME OF THE ASSESSEE AND NOT UNDER ARTICLE 12 AS ROYALTY. ON FURTHER CHA LLENGE BY THE REVENUE THE HONBIE DELHI HIGH COURT IN ORDER DATE D 19/12/2016 IN ITA NOS. 898/2016 899/2016 & 900/2016 HAS DECIDED THE CONTROVERSY IN FAVOUR OF THE ASSESSEE OBSERVING AS UNDER: 3 ITA NO.5539/DEL/2019 THE QUESTIONS WHICH THE REVENUE SEEKS TO URGE IN T HESE APPEALS UNDER SECTION 260A OF THE INCOME TAX ACT 1961 ('TH E ACT) ARE COMMON I.E. WHETHER THE AMOUNTS PAID BY THE ASSESSEE TO I TS LICENSORS AMOUNTED TO ROYALTY WITHIN THE MEANING OF THE EXPRESSION UND ER SECTION 9(L)(VI) AND ARTICLE 12 OF THE LNDO- FINLAND DOUBLE TAXATION AVO IDANCE AGREEMENT (DTAA). THE INCOME TAX APPELLATE TRIBUNAL (ITAT) FO LLOWED THE PREVIOUS JUDGMENTS OF THIS COURT INCLUDING THE JUDGMENT IN D TT V. LNFRASOFT LTD. 264 CTR 329 AND ALSO THE JUDGMENT - DIT (INTERNATIO NAL TAXATION) VS. NOKIA NETWORKS OY 25 TAXMAN.COM 255 (DELHI). THE LA TER DECISION HAD AN OCCASION TO INTERPRET THE SAME PROVISION IN THE CON TEXT OF THE VERY SAME TREATY. SINCE THE ITA T HAS FOLLOWED THE PREVIOUS BINDING J UDGMENTS OF THIS COURT THE PRESENT APPEALS DO NOT RAISE A SUBSTANTI AL QUESTION OF LAW. THE COURT IS ALSO SATISFIED THAT THE APPLICATION OF LAW BY THE IT AT WAS SOUND AND PROPER. THE APPEALS ARE THEREFORE DISMISSED. ' 4.6. IN THE ASSESSMENT YEARS 2011-12 AND 2012-13 AL SO THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASS ESSEE VIDE ORDER DATED 03/10/2016 IN ITA NO.726/DEL/2015 AND 1686/DE L/2016 FOLLOWING THE EARLIER DECISION OF THE TRIBUNAL FOR ASSESSMENT YEARS 2007-08 TO 2009-10. 4.7. THEREFORE RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR AS SESSMENT YEARS 2007-08 TO 2012-13 AND THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT (SUPRA) WE HOLD THAT SALE OF THE SOFTWA RE BY THE ASSESSEE IS SALE OF STANDARD SOFTWARE WHICH IS CHARGEABLE T O TAX UNDER ARTICLE 12 AS ROYALTY IN THE YEAR UNDER CONSIDERATION. 4. AS NO DISTINGUISHING DECISION HAS BEEN BROUGHT TO OUR NOTICE BY THE LEARNED DR IN FAVOUR OF THE REVENUE. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-ORDINATE BENCH (SUPRA) AND THE DECISION OF THE HONBLE JURISDICTIO NAL HIGH COURT MENTIONED THEREIN WE HOLD THAT SALE OF THE SOFTWARE BY THE ASSESSEE IS S ALE OF STANDARD SOFTWARE WHICH IS CHARGEABLE TO TAX UNDER ARTICLE-7 OF THE DTAA AS BU SINESS INCOME OF THE ASSESSEE AND NOT UNDER ARTICLE 12 AS ROYALTY IN THE YEAR UNDER C ONSIDERATION. 5. GROUND OF APPEAL NO.2 WITH ITS SUB-GROUND IS AL LOWED. 4 ITA NO.5539/DEL/2019 6. THE NEXT GRIEVANCE RELATES TO SHORT CREDIT OF T DS. 7. WE DIRECT THE AO TO GRANT THE CREDIT OF TDS AFT ER DUE VERIFICATION AFTER GIVING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. THIS GRIEVANCE OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 8. THE NEXT GRIEVANCE RELATES TO THE CHARGEABILITY OF INTEREST U/S 234B OF THE ACT. THE LEVY OF INTEREST THOUGH MANDATORY BUT CONS EQUENTIAL TO THIS ORDER. WE DIRECT ACCORDINGLY. 9. THE ISSUE RELATING TO THE RECOVERY OF INTEREST PAID TO THE ASSESSEE U/S 244A OF THE ACT NEEDS RE-VERIFICATION WE ACCORDINGLY DI RECT THE AO TO EXAMINE THE ISSUE AFRESH AS PER PROVISIONS OF LAW. 10. IN THE RESULT THE APPEAL FILED BY THE ASSESSE E IS ALLOWED. DECISION ANNOUNCED IN THE OPEN COURT IN THE PRESENC E OF REPRESENTATIVES OF BOTH THE SIDES ON 19 /05/2021. SD/- SD/- [KULDIP SINGH] [N.K. BILLAIYA ] JUDICIAL MEMBER ACCOUNTANT MEMBER DELHI; DATED: 19/05/2021. F{X~{T? F{X~{T? F{X~{T? F{X~{T? FA FA FA FA P.S P.SP.S P.S COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR ITAT NEW DELHI